To Break up the Boys' Club, Ladies, Why Not Start Your …

Women in VC roles can’t rely on public relations fixes, token nods or the chivalry of their male colleagues. They have to do it themselves.

May
21, 2019

6 min read

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Elodie Dupuy felt she had paid her dues. She had spent nine years at top-tier venture capital firm Insight Venture Partners, where she climbed the ranks from receptionist to vice president, followed by a stint at another investment firm. But well into interviews for a new partner role at a VC firm, following the birth of her daughter, Dupuy told me, the male partner asked whether she was serious about returning to work.

And that was unacceptable. “I was tired at times of being seen as a woman to hire to check some quota,” Dupuy said.

So last year, she took action: Dupuy and her former Insight colleague Jessica Davis launched Full In Partners. Since that time, they’ve been busy raising up to $200 million to invest in growth-stage tech startups.

That was Dupuy’s response to that clueless male VC executive: If you can’t join ’em, beat ’em. And apparently that view has caught on: Last year, 39 women-led venture firms were raising funds, a 63 percent increase over 2017 and triple the number in 2016, according to Fairview Capital. More than 60 percent were doing this for the first time.

Those founders include Lynne Chou, who left Kleiner Perkins to form Define Ventures; Marissa Campise, formerly of Greycroft, Venrock and SoftBank, who founded Rucker Park Capital; and Christine Aylward of Foresite Capital, who launched Magnetic Ventures. These women are raising between $50 million and $100 million.

While the number of women starting their own fund is still small, the increase in their ranks seems to signal a real trend. Already, women are off to a fantastic start in 2019, with Kleiner Perkins star Mary Meeker raising $1.25 billion for her new firm Bond Capital, and Renata Quintini of Lux Capital partnering with Institutional Venture Partners’ Roseanne Wincek to launch their venture shop.

What better way to shake up a critical industry long dominated by the usual suspects than to go ahead and grab the reins? Forget about waiting for that promotion to write the big checks — go ahead and promote yourself!

A culture reflecting a lack of diversity

The lack of diversity within the ranks of VC firms has long been evident. The first repercussion to attract notice was the dearth of investments in female-led companies. Key reasons: VCs tend to invest based on past patterns and in people who remind them of themselves. With investors being overwhelmingly white and male, that chain was never broken.

And this fact laid bare the harm that VC firms’ lack of diversity has been inflicting not only on female entrepreneurs, but on innovation and financial returns in general.

In what is perhaps the loudest call to action, women VCs led by ace investor Aileen Lee — who founded Cowboy Ventures in 2012 — launched All Raise last year with a mission to double the percentage of female partners from 9 percent to 18 percent by 2028. This is a laudable and necessary initiative, but we need to move faster.

After all, the number of women decision-makers at venture capital firms has hardly budged in the past 20 years. This statistic was revealed recently by the annual VC Diversity Index, and things have hardly improved since, despite the increase in media attention.

But if you take a closer look at the index, at the top sits Forerunner Ventures, a firm led by Kirsten Green, one of the first women to crash the VC boys’ club. And on the 2019 Forbes Midas list, which ranks the top 100 VCs, seven of the 12 women included have their own fund. Clearly, the research showing that diversity drives better returns has merit.

Where opportunity lies

Womenwith newly established funds, such as Jesse Draper, Jennifer Neundorfer and Sara Brand, also see opportunity in an underfunded pool of entrepreneurs. Altogether, women founders raised $2.8 billion last year — 2 percent of the total amount invested by venture capitalists, according to Pitchbook.

Two other things need to happen to push progress along. Entrepreneurs — men and women — must seek out venture capital firms where women have a say in who gets funding. Natalie Mackey, the founder of cosmetics startup Winky Lux, did that after male-dominated firms turned her down. She ended up raising $8 million from women-led funds and GGV Capital, which boasts Jenny Lee as managing partner.

Institutional fund investors, so-called limited partners (LPs), must take a more proactive role in backing women-led venture capital firms. They should also demand diversity of VC-backed startup teams. Given that diversity drives better financial outcomes, this should be a no-brainer. It will ensure that VCs hear more founders who don’t necessarily look like them.

For now, many women funders stepping out on their own are having to start with proof-of-concept funds to establish credibility with LPs. They tell of having to cobble together smaller checks than do men, who face far less scrutiny as first-time fund leaders.

Before raising $10.4 million for her fund Halogen Ventures, [a firm my venture fund invests in] Draper ran Valley Girl Ventures, where she was an early angel investor in Sugarfina, a popular confectioner. Recently, she sold two of Halogen’s portfolio companies to Walmart and P&G for $100 million each.

Draper is perhaps a stark example of a generational shift in the venture capital world. She’d come from a long line of strictly male investors, and didn’t believe she’d fit in. “I thought I couldn’t be an investor because I didn’t see any [women],” she told me.

To alter the face of the industry, women must be their own change agents. We can’t rely on public relations fixes or token nods or the chivalry of our male colleagues, and it seems we can’t rely on the past to fix the future. We should do what women do so well: make it happen for ourselves.